Feature

Production Essays: Building our own recovery

The APA has an agenda to keep the production industry moving forward, while making it more attractive to advertisers.

If someone had announced on 1 January 2009 that, come the end of the year, all 170-odd companies in the Advertising Producers Association (and the agencies they work with) would still be here, we might have expressed some surprise.

We can put that staying power down to the commercials production industry's ability to adapt and the extreme flexibility of its business model, with fixed costs kept to a minimum: a model that other business sectors are increasingly seeking to emulate.

Most importantly, though, is that core advertisers have kept faith with TV advertising through the recession.

We have seen that in the standard of work produced this year: the APA Collection, our compendium of the best commercials of the year, which premiered at The APA Show, was of the highest quality. The cliche is that challenging times and lower budgets engender better creative, but there is no evidence that the high quality of the APA Collection is a consequence of that. Rather, it is a consequence of a number of clients continuing to have faith in themselves and the advice and work coming from their agencies.

The production sector was already inured to a very competitive environment, with constant cutbacks to budgets before the recession. The upside is that it was already battle-hardened, in terms of controlling costs and fighting for work and decent budgets.

But mere survival will not satisfy the ambitions of talented people taking entrepreneurial risks: the people running production companies (for the purpose of this article, please take that to refer to all APA companies, including post, editing, music and sound).

So how do we move forward and create a business in which talent can thrive, to the benefit of advertisers? And what do we need, in addition to expertise in commercials production, resilience and adaptability, to achieve that?

First, we need to persuade advertisers of the potential of TV advertising. That means existing advertisers and those that have not yet used TV.

The continued confidence in TV of major brands through the recession is testament to that. All the research supports the view that brands that advertise through a recession emerge from it exponentially stronger than those that do not. Statistics are key to this first objective and we are fortunate to have two very strong foundations in making the case for TV, in the form of the IPA Effectiveness Awards and the work of Thinkbox.

The IPA Effectiveness Awards are the most important in advertising because they demonstrate the great return that advertisers get from good advertising. In the most recent awards, 22 of the 23 winning campaigns included TV advertising as part of the marketing mix, the highest of any media.

Likewise, Thinkbox's research gives the lie to what we should call "2001 thinking": the view that the growth of internet/digital media means that no-one is watching TV anymore. TV consumption is about the same as it was in 1991, people with Sky+ are actually seeing more ads (because they are watching more TV and some live TV, which counteracts the effect of ad skipping) and the proportion of viewers watching commercial TV is the highest it has ever been.

That last fact is also important as a response to the headlines about ITV losing market share: invariably this is portrayed as indicative of TV advertising being on a downward trajectory, but that is wrong. ITV was bound to lose market share moving from an environment of four channels to one of several hundred.

The same happened at Radio 1 when it went from being virtually the only provider of popular music to one of several. It lost market share and there was speculation as to what was being done wrong and criticism of the management. This missed the point, which was the inevitability of losing market share for any business moving from a virtual monopoly to a fully competitive marketplace.

Like Radio 1, ITV will find a new equilibrium and will continue to be valued by advertisers. The point at the moment is that ITV losing market share says nothing about TV advertising: the important statistic is that commercial TV has a bigger audience share than ever.

Second, we need to make sure we develop the full advertising potential of digital media. That presents a real challenge in the production community. In the past, 100 per cent of our energy has been on making great films, making the script come alive in the best way possible.

With digital media, production companies need to understand the potential of a script across different media. For example, if a production company is making a TV commercial and sees the potential to produce commercials based on it in other media, to develop that potential it needs to be able to work with the agency to identify opportunities for advertisers.

That can only be done if the production company is able to articulate the benefits to the client of doing that, in terms of knowledge of other campaigns and what they delivered in return on investment to the advertiser.

Third, we need to explore fully the potential of overseas markets. Production companies have been industrious in doing this, particularly through relationships with partner production companies in the US and representation in Europe.

The APA is helping its members expand their horizons. That is a challenge because, despite being entrepreneurial and keen to find new markets, production companies are small and very tightly run ships, which do not have resources available for sustained worldwide marketing efforts.

So we have organised events in key markets, such as Japan and China, which have opened doors. Companies have followed this up with spectacular success, which we plan to build on with a sustained worldwide marketing effort on behalf of our members.

The market is changing, but there is a clear path to success for production companies utilising their existing strengths, particularly their extremely flexible business model and the unrivalled quality of their film-making skills. Following that path will require them to wrestle with new complexities and acquire new areas of knowledge, and we are here to help them do that.

Production companies aren't waiting for the economy to get better; they are busy generating their own upturn.

- Steve Davies is the chief executive of the Advertising Producers Association.

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